The Seoul Metropolitan Government said on the 22nd it will introduce "Seoul Companion REITs" (regional coexistence REITs) to share public development revenue with citizens.
REITs are real estate investment companies that pool funds from many investors to invest in real estate and distribute the generated revenue, and the system first began in 2001. In the private sector, they mainly operate real estate such as offices or the retail institutional sector to pay dividends, or are run in a corporate form to securitize a corporation's asset.
Seoul Companion REITs are structured so that the public sector leads the high-risk development phase to remove business uncertainty, and citizens participate as shareholders in the operating phase after completion, when revenue stabilizes, to share the revenue. Centered on a public participation business structure in which the Seoul Housing and Urban Development Corporation (SH) and the Seoul Metropolitan Government hold at least 51% equity, it targets stable annual dividends of at least 6%.
The citizen subscription size is around 30% of the REITs' capital. The scope of the public offering region will be set according to the size and characteristics of each target project.
The Seoul Metropolitan Government is reviewing pilot application of Seoul Companion REITs to the public-led mixed-use development of the Yongsan International Business District B9 site and the private investment project for the Seocho Fire School site. This year, the city plans to establish detailed operating standards for each pilot project's application of "Seoul Companion REITs," including formulating specific business plans, the scope of citizen offerings, offering size, and investor protection measures.
Kim Yong-hak, Seoul's future space planning director, said, "Seoul Companion REITs are a new attempt to share development gains not with a few but with citizens, a new model that expands the city's slogan 'Walking with the weak' to all areas of urban development."